Spanish bank BBVA led the £82-million funding round for Atom Bank, a UK mobile banking startup and app, with £45 million investment for a 29.5% stake in Atom. Among other investors are previous backers Woodford and Toscafund as well as Marathon and Polar Capital. Atom raised £135 million to date in an 18-month course and is looking to launch to the public in the beginning of 2016.

As described in the press release, Atom is a startup bank which has not been launched yet, but recently authorized by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. Founded over a year ago and based in the City of Durham, Atom is working with partners to bring pioneering technology to Europe for the first time. Atom is building the UK’s first bank designed specifically for the digital realm, offering easy and convenient banking along with unique and engaging ways to manage money.

Francisco González, BBVA’s Chairman and Chief Executive, commented in Atom's official press release, “BBVA believes the UK offers excellent growth opportunities and that digital banks that put the customer first are the future. BBVA’s investment in Atom backs those beliefs in one move.”

Mark Mullen, Atom's Chief Executive, expressed excitement about the partnership saying, "Atom is delighted to partner with BBVA. We have long admired their vision and leadership, and like us, BBVA clearly believes in the power of technology to transform customers' lives for the better. We share BBVA's commitment to place the interests of customers at the heart of everything they do."

BBVA is known to be on the forefront of innovations, especially in digital banking. We have been studying the bank’s activities in FinTech and its impressive level of engagement which is revolutionizing traditional banking. Last year, BBVA acquired US online banking startup Simple for $117 million, launched a $100-million venture fund to support FinTech startups and invested €2 billion in Turkey's second-largest bank focusing on digital services, Garanti Bank, to increase its stake to 40%. Silicon Valley FinTech players like Prosper, Coinbase, Personal Capital are also a part of BBVA Ventures’ portfolio.

Along with other traditional financial institutions, BBVA realized the necessity of strategic investments in FinTech in order to stay relevant for the customers down the road when digital banking may overtake the traditional way of providing financial services. Startups like Atom and Simple, which attracted BBVA's attention, have an edge as they are dropping significant costs of establishing wide physical presence and fees. Highly demanded by underbanked smartphone owners in emerging markets, only those disruptive models will have a higher momentum and better opportunities. All that lead BBVA and other banking industry giants to start establishing strategic share presence in those startups.

With Atom, the management team could be another reason the startup appealed to BBVA. The startup has a strong non-exec board which includes founder and Chairman Anthony Thomson, also the founder and former Chairman at Metro Bank. Mr. Thompson is also the Chairman of the Financial Services Forum, the UK’s leading membership organization for senior FS industry executives and Chairman of the National Skills Academy for Financial Services, a national charity. CEO Mark Mullen is the former Chief Executive of First Direct, HSBC’s groundbreaking telephone/online-only bank. Extensive experience and expertise assure the knowledge base and promise high potential of a new venture.

BBVA's brand, network and partnerships can help Atom with gaining trust and share. BBVA’s established operational efficiency can also solve the technical challenges which might appear in the future. BBVA doesn’t have a large presence in the UK, which would make the investment a step into the market without cannibalizing own services. According to The Financial Times, the largest market shares in UK retail banking belong to Lloyds TSB, HBOS, Barclays, HSBC and Santander. For BBVA, strategic investment in a challenger bank can be the first step to establishing a wide presence in the country.

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